— Photo: Shashi Ashiwal

FINDING ALLIES: S. Ramadorai (right), Managing Director and CEO, TCS, and S. Mahalingam, CFO, addressing a press conference in Mumbai on Monday.

MUMBAI: Tata Consultancy Services (TCS), through its subsidiary Tata Consultancy Services Asia Pacific Pte., has signed a shareholder promoters agreement with three Chinese firms — Beijing Zhongguancun Software Park Development Company, Uniware Company and Tianjin Huayuan Software Area Construction and Development Company — to establish China's first industrial scale software company.

The joint venture, Tata Consultancy Services (China) Company, will provide IT outsourcing services and solutions to the Chinese domestic and global markets.

The third signatory to the MoU is Microsoft Corporation and it will participate in the joint venture as a strategic investor within one year of the venture being established.

$12.6 m investment

TCS will have a majority stake and management control of the joint venture, which will be located in Beijing's Zhongguancun Software Park. The paid up capital of the joint venture is $15 million, of which TCS will hold 72.6 per cent, involving an investment of $12.6 million, and the Chinese companies the balance.

S. Ramadorai, CEO and MD, TCS, said, that in one year, the joint venture partners would divest ten per cent stake in favour of Microsoft Corporation. In the longer run, TCS could consider buying out the stake of the joint venture partners, making the company a 100 per cent subsidiary. The joint venture is expected to start operations in September and will provide IT services and solutions to China's domestic market as well as major markets, particularly Japan and the rest of the Asia-Pacific region, the U.S. and Europe.

The key objective of this initiative is to build the new venture as a role model for the growing Chinese software industry.

The joint venture will leverage the complementary strengths of the different partners in technology, software development management, talent acquisition and training, including world-class processes and practices of TCS as well as its experience of handling large and industrial-scale technology projects.

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